Northern Arc Capital Ltd. · NSE:NORTHARC
Northern Arc Capital — Q3 FY25 Earnings Presentation
43 slides from Northern Arc Capital's earnings presentation, Feb 14, 2025
Slide 1: Exchange filing cover letter - Investor Presentation Q3 FY25
Y + NORTHERN ARC Ref No. : NACL/05/FE Bl 2024-25 February L4,2025 To, To, BSE Limited, National Stock Exchange of lndia Ltd., Phiroze Jeejeebhoy Towers, Exchange Plaza, C-l, Block G, Dalal Street, Bandra Kurla Complex, Mumbai- 400001 Bandra (E) Scrip Code: 54/.260 Mumbai-400 051 Scrip Svmbol: NORTHA
Slide 2: Investor Presentation Q3FY25 & 9MFY25
Investor Presentation Q3FY25 & 9MFY25 Financing the Retail Credit Needs of India’s AA-(Stable) Underserved Households & Businesses across By ICRA Limited & India Ratings focused sectors 1
Slide 3: Disclaimer
Disclaimer "This presentation and accompanying slides (the “Presentation”) has been prepared by Northern Arc Capital Limited (“Company”) to be presented during the analyst call as required under Regulation 46 (2)(o) of the SEBI (LODR) Regulations, 2015, and is not for release, distribution or public
Slide 4: Content
Content… Northern Arc At a Lending 01 Glance 02 Fund 03 Placement 04 Management Risk Robust 05 Management 06 Technology Stack Financial 07 Liability Franchise 08 Performance Board and 09 Management 10 Way Forward 3
Slide 5: Northern Arc At a glance
Northern Arc At a glance... y + N@RTHERN ARC
Slide 6: Diversified credit platform catering to India's retail credit needs
Diversified credit Platform catering to India’s Retail Credit Needs Lending Fund Placement Management Across focus segments INR 1 lakh+ Cr Funds raised for Performing Credit Funds Partners AUM of INR 12,250 Cr INR 8,000+ Cr in 9MFY25 AUM of INR 2,796 Cr Integrated credit ecosystem at play 5
Slide 7: Expanding relationships & distribution reach to scale customer base
Expanding Relationships & Distribution reach to scale customer base Strong 3P Distribution Network through… Presence 19 Lakh+ Direct Customers Branches 373 (19) (19) 675 Districts (13) (10) (12) Partnerships (12) Exposure% Originator Partners 343 (2) 12% (11) 28 States (92) (7) People <1% (168) Empl
Slide 8: Data and technology platform which creates strong network effects
Data and Technology Platform which creates strong network effects Multi-channel approach that has impacted over 115 million+ lives across focus sectors through a ‘digital & data first’ approach A flywheel re-generating flows across the ecosystem Multiple channels Fulfilment of Credit Demand of Credi
Slide 9: Demonstrating growth in AUM and profitability in challenging environment
Demonstrating growth in AUM and profitability in challenging environment Resilient growth in AUM over the decade On the back of granular loan portfolio (INR crore) (INR crore) 11,710 12,250 5,833 6,387 9,009 7,108 3,385 4,342 5,221 3,664 3,883 1,659 2,734 1,019 1,655 486 804 986 Mar'15 Mar'16 Mar'17
Slide 10: High Performing Matrix – 9MFY25 & Q3FY25
High Performing Matrix – 9MFY25 & Q3FY25 PAT RoA RoE 9MFY25 INR 267 Cr 2.9% 12.0%1 9MFY24 INR 220 Cr 2.9% 14.1% PAT RoA RoE Q3FY25 INR 76 Cr 2.4% 8.9%1 Q3FY24 INR 75 Cr 2.8% 13.9% Lending Fund GNPA Net NPA Book Value / Share AUM AUM As at Dec’24 INR 12,250 Cr INR 2,796 Cr 0.90% 0.37% INR 211 As at D
Slide 11: Healthy growth in transactions volume
Healthy growth in transactions volume Gross Transaction Volume INR crore CAGR 31% 27,385 29,324 24,245 19,896 20,548 13,054 9,116 7,523 6,075 FY21 FY22 FY23 FY24 Q3FY24 Q2FY25 Q3FY25 9MFY24 9MFY25 Growth in Disbursements INR crore CAGR 54% 14,885 14,247 11,788 8,982 10,192 4,093 5,035 4,780 3,641 FY
Slide 12: Northern Arc Lending Business
Northern Arc Lending Business 11
Slide 13: AUM growth led through diversification
AUM Growth led through diversification – Direct MFI Exposure less than 10% Assets under Management – By Sector INR Crore / % 16% YoY 12,309 12,250 CAGR 31% 11,710 12% 13% 10% 10,603 10% 9,009 27% 30% 29% 14% 26% 7,108 Conscious Calibration in 21% MFI portfolio. 18% 23% 19% D2C share 20% 5,221 less t
Slide 14: Increasing share of Direct to Customer channel
Increasing share of Direct to Customer channel AUM 5,221 7,108 9,009 11,701 12,250 INR Crore 50% 48% 62% 77% 81% 50% 52% 38% 23% 19% Mar'21 Mar'22 Mar'23 Mar'24 Dec'24 Direct to Customer Intermediate Retail 13
Slide 15: Consistent growth across the sectors with conscious calibration in MFI
Consistent growth across the sectors with conscious calibration in MFI MSME Consumer Finance MFI Others INR Crore 20% YoY 33% YoY 18% YoY 43% YoY 4,827 4,017 3,608 2,723 2,797 2,287 1,528 1,066 Dec'23 Dec'24 Dec'23 Dec'24 Dec'23 Dec'24 Dec'23 Dec'24 14
Slide 16: Northern Arc Placement Business
Northern Arc Placement Business 15
Slide 17: Placement business complementing lending business
Placement business complementing IR lending business INR 1 lakh+ Cr 180 217 Aggregate Placements Volume Investor Partners Originator Partners till date Placement Volumes Placement Fee Income INR crore INR crore 8,161 8,037 20 17 3,325 1,906 2,123 5 6 5 Q3FY24 Q2FY25 Q3FY25 9MFY24 9MFY25 Q3FY24 Q2FY2
Slide 18: Northern Arc Fund Management Business
Northern Arc Fund Management Business 17
Slide 19: Fund Management - Strong pipeline of new funds
Fund Management - Strong pipeline of new funds Fund AUM (INR crore) AUM Fee Realisation Fund 9 & PMS Series A 1,100+ matured (INR 605 1.4% Investors crores) 3,000 1.2% 1.2% 1.1% 2,500 1.0% 1.0% 1.0% 6 10+ Years 1.0% successful AIF exists Experience 2,000 0.8% 1,500 2,996 2,776 2,858 2,796 0.6% Key U
Slide 20: Northern Arc Risk Management
Northern Arc Risk Management 19
Slide 21: Robust risk management framework and in-house collections infrastructure
Robust Risk Management Framework and in-house collections infrastructure Supported by Independent collections & Analytics and Risk Multi-dimensional Risk Management Practice ecosystem Modelling 0 Pre due reminders to the 44 mn+ data points customers collected over a decade 0-15 Strategic Credit DPD
Slide 22: Diversified & granular portfolio resulting in GNPAs below 1%
Diversified & Granular portfolio resulting in GNPAs below 1% Diversification augmented by proprietary tools and portfolio granularity driving asset quality Sector Diversification Asset Quality Drivers Granular Portfolio • Exposure (in terms of AUM) Proprietary Scorecards for towards Top 10 borrowers
Slide 23: Portfolio Quality
Portfolio Quality INR ECL % : provision coverage for each Assets under Management Assets under Management (%) ECL : Expected Credit Loss crore/% stage By Dec’23 Mar’24 Jun’24 Sep’24 Dec’24 Dec’23 Mar’24 Jun’24 Sep’24 Dec’24 Dec’23 Mar’24 Jun’24 Sep’24 Dec’24 Dec’23 Mar’24 Jun’24 Sep’24 Dec’24 Stagin
Slide 24: Northern Arc Proprietary Technology Platforms
Northern Arc Proprietary Technology Platforms 23
Slide 25: Robust proprietary technology platforms – opportunity for monetisation
Robust Proprietary Technology platforms – Opportunity for monetisation API Based Co-lending Alternative Retail Curated Loan Underwriting & Co-origination Debt Investment Origination System Scorecard Tech Solution Platform nPOS Year Started FY18 FY22 FY22 FY24 INR 1.5 Tn+ 7Mn+ 37k+ 2.5 lakhs+ Credit
Slide 26: Leveraging Technology Stack
Leveraging Technology Stack Lead Generation Customer Onboarding Credit Underwriting Pre-Disbursal Loan Disbursal Loan Servicing • Digital form • OKYC/EKYC PD with customer CAM • E-Nach • Digital disbursal • Customer app summary assessment IMPS/RTGS/NEFT • Feet on Street • PAN verification • E-Sign •
Slide 27: Northern Arc Liability Franchise
Northern Arc Liability Franchise 26
Slide 28: Diversified sources of funding and proactive liquidity management
Diversified Sources of Funding and Proactive Liquidity Management Well-diversified funding profile Liquidity position Data as of December 31, 2024 Cash & Bank Balance Undrawn Sanction Domestic Retail/HNIs, 2% Positive ALM 1265 NBFC, 6% across buckets 978 960 803 754 742 Offshore FIs and 2.8 yrs DFIs
Slide 29: Northern Arc Financial Performance
Northern Arc Financial Performance 28
Slide 30: Shift towards D2C positively impacted yields & NIM
Shift towards D2C positively impacted yields & NIM Portfolio Yields % and Cost of Funds %* 17.5% 17.5% 17.0% 16.8% 16.8% (2) 16.3% 14.7% 14.2% 13.9% 10.2% 9.2% 9.1% 9.5% 9.3% 9.4% 8.6% 8.8% 8.9% FY21 FY22 FY23 FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25 Portfolio yield CoF NIM % (1) 9.1% 9.1% 9.1% (2) 8
Slide 31: Robust growth in profitability
Robust growth in profitability Revenue From Operations * INR crore CAGR 37% 1,685 1,523 1,190 1,216 864 657 450 518 499 FY21 FY22 FY23 FY24 Q3FY24 Q2FY25 Q3FY25 9MFY24 9MFY25 Profit After Tax (excluding NCI) (INR Cr) CAGR 66% 308 267 230 220 172 75 98 76 68 FY21 FY22 FY23 FY24 Q3FY24 Q2FY25 Q3FY25 9
Slide 32: Consolidated Income Statement
Consolidated Income Statement INR crore Q3 FY24 Q2 FY25 Q3 FY25 YoY % QoQ % 9MFY24 9MFY25 YoY% FY24 Interest income* 427 492 478 12% -3% 1,155 1,450 26% 1,588 Interest expense 184 205 211 15% 3% 521 624 20% 725 Net Interest Income 244 288 267 10% -7% 634 826 30% 864 Fee & Other Income 23 26 21 -7% -
Slide 33: Financial Dupont
Financial Dupont Particulars Q3FY24 Q2FY25 Q3FY25 9MFY24 9MFY25 FY24 Interest Income* 16.0% 15.6% 15.0% 15.3% 15.7% 15.3% Interest Expense 6.9% 6.5% 6.6% 6.9% 6.7% 7.0% Net Interest Income 9.1% 9.1% 8.4% 8.4% 8.9% 8.3% Fee and Other Income 0.9% 0.8% 0.7% 0.8% 0.8% 0.9% Net Revenue 10.0% 9.9% 9.0% 9.
Slide 34: Balance Sheet
Balance Sheet INR crore Dec’23 Mar’24 Jun’24 Sep’24 Dec’24 Assets Financial assets Cash and bank balances 392.2 408 589 811 513 Loans 8,496 9,210 9,651 10,004 9,520 Investments 1,706 1,785 1,661 1,766 1,976 Other financial assets 167 164 107 179 183 Non-financial assets 123.1 141 125 176 210 Total a
Slide 35: Diversified Shareholding mix
Diversified Shareholding mix Retail Investors, Marquee Investors Shareholding 16% Mutual Funds & AIFs, 21% 360 One Special Opportunities Fund 16.7% Qualified Institutional Leapfrog Financial Inclusion India (II) Ltd 16.2% Buyer, 2% Augusta Investments II Pte. Ltd. 16.0% Eight Roads Investments Mauri
Slide 36: Northern Arc Board & Management
Northern Arc Board & Management 35
Slide 37: Experienced and Professional Management Team
Experienced and Professional Management Team Pardhasaradhi Rallabandi Atul Tibrewal Saurabh Jaywant Group Risk Officer & Governance Chief Financial Officer Chief Legal Officer Head 31+ years of experience in Banking 22+ years of experience in finance 22+ years of experience in Previously associated
Slide 38: Distinguished Board and Marquee Investors Driving Strong Governance
Distinguished Board and Marquee Investors Driving Strong Governance Mr. P S Jayakumar Ms. Anuradha Rao Mr. Ashutosh Arvind Pednekar Chairman & Non-Executive Non-Executive Non-Executive Independent Director Independent Director Independent Director ---------------------------------------- -----------
Slide 39: ESG Framework
ESG Focused Business Model Positively Impacting 115 Mn+ Lives IVCA Award Impact Assets 50 for Social Impact Featured Consistently in 2023 since 2021 Robust ESG Framework with Effective Tools & Regular UNSDG(1) Alignment Built into the Business Model Monitoring • Committed to responsible financing fr
Slide 40: Northern Arc Way Forward
Northern Arc Way Forward vy N@RTHERN ARC
Slide 41: Way Forward
Way Forward Financing the Credit Needs of India’s Underserved Households & Businesses by Credit-first and Customer- Data and technology A Diversified Platform Broad-based Franchise driven Centric Culture One of the leading players in Expand presence in Direct to Focus on improving credit quali
Slide 42: Mission and Vision
Mission and Vision Summary Addressing a Large Addressable Market and Underpenetrated Market with Strong Sectoral VISION MISSION Expertise Our Vision is to be a trusted To enable access to finance platform that enables the for the underbanked in an Large Ecosystem of Partners and Data and Technology
Slide 43: Thank You
Thank You For any query, please contact : Atul Tibrewal Chief Financial Officer atul.tibrewal@northernarc.com Chetan Parmar Head Investor Relations chetan.parmar@northernarc.com 42